Outside of Japan, the kei is an oddity. Maybe your park service uses a Daihatsu Hijet to move landscaping equipment around, but it's probably not legal for road use. In Canada, where kei cars are frequently imported, they're great in town but sketchy on the freeway. Not so in Japan—they're wildly, wildly popular. We're talking 40% of the total new car sales in the country.

They're not all tiny 4WD trucks and turbocharged vans either. The class, by law, was limited in displacement and horsepower, forcing the manufacturers to develop creative technologies—and, frankly, awesome cars. The Honda Beat was a tiny mid-engined sportscar with individual throttle bodies and drive-by-wire, that made 63 hp out of 656cc without turbocharging. It was like a 1/3-scale NSX. And it wasn't an anomaly. There's the Autozam (Mazda) AZ-1, the Daihatsu Copen, the Suzuki Alto … and those are just the kei sportscars that stand out.

To understand why so many new car buyers want minuscule cars and trucklets with 660cc engines, you have to understand the situation in Japan. Urban areas are dense—parking spots are tiny. Gasoline is extremely expensive. And a second vehicle is usually a huge burden on Japanese families—the kei's tax incentives and low fuel consumption means a one-car household can stretch to own two.

After WWII, the Japanese government needed to encourage mobility to stimulate the economy. Suited to the country's needs, kei cars are still almost ubiquitous in lower-income rural areas. Farmers rely on kei cars to get goods to market, and countless small businesses from mobile locksmiths to coffee shops are run out of them. They're useful and they're affordable. Or, they were.

Now, the tax relief is over. The Japanese government jacked the kei tax up by a full 50% in April, with higher sales taxes and gasoline taxes to boot. The idea is to eliminate the kei's competitive advantage, and force Japanese drivers to buy the non-kei cars that Japanese companies export as well as sell domestically.

The Japanese government seems to believe that the Japanese auto industry is wasting development dollars on keis, dollars that could be put towards cars sold outside Japan. Making kei cars expensive is one way to shrink the segment, but it disproportionately affects the poor, unfortunately. It will also disproportionately affect smaller Japanese automakers like Suzuki, which have pulled out of the American market and regrouped in the home market, doubling down on kei car development.

The kei car was always an artificial phenomenon, spurred by a government seeking to put an economy devastated by war back on its feet. That mission was accomplished several times over, but does that mean the kei must be relegated to history when its carved such a successful niche out in Japan? Will new car buyers convert to larger non-keis, or stop driving?

I don't think the answer is so extreme. I think Japanese manufacturers will find a way to make globally-marketable vehicles that fill, in a sense, the kei's tiny shoes. There's no one saying they can't still produce 660cc cars, as long as they can do so profitably without the tax incentives. But the writing is on the wall for the kei as we know it, and it's up to Japan to figure out what the post-kei world looks like.